Carlyle to acquire around 25% stake in Airtel’s Data Centre biz; valuation at $1.2 bn

Bharti Airtel and Comfort Investments II, an affiliated entity of CAP V Mauritius Ltd, an investment fund managed and advised by affiliated entities of The Carlyle Group, have announced an agreement under which Comfort Investments II will invest $235 million in Nxtra Data Ltd, a wholly owned subsidiary of Airtel engaged in the data centre business.

The post-money enterprise valuation of Nxtra is approximately $1.2 billion and Carlyle will hold a stake of approximately 25 per cent in the business upon completion of the transaction, with Airtel continuing to hold the remaining stake of approximately 75 per cent. The transaction is subject to the necessary regulatory approvals, including approval from the Competition Commission of India.

Headquartered in New Delhi, Nxtra from Airtel offers secure data centre services to leading Indian and global enterprises, hyperscalers, start-ups, SMEs and governments. Nxtra’s nation-wide portfolio of 10 large data centres and more than 120 edge data centres provides customers with co-location services, cloud infrastructure, managed hosting, data backup, disaster recovery, and remote infrastructure management.

India is witnessing a considerable surge in demand for secure data centres as businesses undertake digital transformation and consumer demand for digital services continues to increase. The expansion of hyperscalers across the region following the government’s directive on data localisation is propelling a lot of this demand, with other market drivers including the growth in user data and increase in cloud penetration.

Nxtra is building multiple large data centres across the country to capture the significant growth opportunities in India. Last year, the company commissioned a state of the art data centre in Pune and is building more across Chennai, Mumbai and Kolkata. Nxtra will use the proceeds from this transaction to continue scaling up its infrastructure and offerings across the country.

Gopal Vittal, MD & CEO (India and South Asia), Bharti Airtel, commented, “At Airtel, we have built a robust data centre portfolio that is future ready and scalable. For us, the security and data privacy requirements of our customers are our top priorities, which we have established as a key differentiator for our data centre offerings. Rapid digitisation has opened up a massive growth opportunity for data centres in India and we plan to accelerate our investments to become a major player in this segment. We are delighted to have Carlyle as a strategic partner in this exciting journey, particularly given their experience in this industry, and look forward to working with them.”

Neeraj Bharadwaj, Managing Director of the Carlyle Asia Partners advisory team, added here, “India is set to become one of the largest markets in the world for digital services. Airtel, with its proven track record of solid execution and customer focus, is well positioned to leverage the potential growth of data centres in India. We look forward to collaborating with Airtel to unlock the full potential of Nxtra.”

According to Greg Zeluck, Co-Head, Carlyle Asia Partners advisory team, “Airtel is a high quality partner in India with whom Carlyle executives have built a strong and constructive relationship with over many years. We are delighted to be collaborating on this together, and believe Airtel’s nation-wide network and strong governance, coupled with Carlyle’s data centre experience and operational capabilities, creates a compelling partnership that will help Nxtra to capture growing demand as data usage continues to surge.”

Airtel is the largest player in India’s enterprise connectivity segment and serves over 2,500 large businesses and over one million medium and small businesses.

Carlyle has prior experience in data centre ownership through investments in Coresite in the US and Itconic in Spain. The firm has deep local knowledge within India having been investing in the market since 2000, with notable investments including SBI Life, SBI Card, HDFC, India Infoline, Delhivery and PNB Housing Finance, as well as the recently announced Piramal Pharma Ltd and SeQuent Scientific Ltd. Carlyle had invested more than $2.5 billion in India as of March 31, 2020.